PH dollar surplus rises to 3-mo high

Earnings of the Bangko Sentral ng Pilipinas (BSP) from its investments abroad pushed up the Philippines’ dollar surplus to a three-month high in August, with bigger windfall seen in the next months as the beginning of the easing era in the US drive more foreign flows to the country.

Latest data from the BSP showed the country posted a balance of payment (BOP) surplus of $88 million in August, a reversal from the $57-million deficit recorded a year ago.

The BOP summarizes an economy’s transactions with the rest of the world during a certain period.

A surplus arises when more foreign funds entered the economy against those that left during a period, which may increase the country’s dollar resources that can be used to pay foreign debts and meet import requirements. A deficit means the reverse happened.

In a statement, the central bank attributed the BOP surplus in August to its net income from its offshore investments.

But despite the August windfall, data showed the country’s eighth-month BOP position stood at a surplus of $1.6 billion, lower than the $2.1 billion surplus recorded in the same period in 2023.

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But the cumulative figure nevertheless matched the $1.6-billion BOP surplus projected by the central bank for this year. The BSP said the January-August dollar windfall “reflected mainly the narrowing trade in goods deficit alongside the continued net inflows from personal remittances, trade in services, net foreign direct investments, net foreign borrowings by the National Government and net foreign portfolio investments.”

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the start of rate cuts of the US Federal Reserve could help the BSP earn more from its offshore investments amid gains in most global financial markets.